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Coronavirus (COVID-19): Paycheck Protection Program and Additional Funding Resources for Small Businesses

Last Updated On: 1/20/2021 10:24:24 PM
This article focuses on the first Paycheck Protection Program established in the Spring of 2020 by the CARES Act. In December 2020, Congress passed another bill that established a second Round of PPP assistance. For more information about Round 2 of PPP, go here.  

What types of businesses can apply to the Paycheck Protection Program?

Any small business that meets the Small Business Administration’s (SBA) size standards may apply for relief under the Paycheck Protection Program (PPP).  The table of size standards can be found here under the Electronic Code of Federal Regulations.  You may also use the Size Standards Tool to determine if your business meets the size requirements.

Other businesses that are eligible for funding include: any 501(c)(3) non-profit or 501(c)(19) veterans organizations, or Tribal business under Sec.31(b)(2)(C) with the greater of 500 employees, or that meets the SBA industry size standard if employs more than 500. Some businesses, including franchises, in Accommodations and Food Services as well as sole proprietors, independent contractors, and self-employed persons are also eligible for the PPP. 

How do I apply for the PPP?

The application form can be found here. Individual applications are reviewed and must be submitted through banking institutions. Acceptance of applications will be based on availability of funding and, possibly, your relationship with a specific bank. The deadline to apply is June 30, 2020 and application is processed on first come, first serve basis. Businesses are advised to apply as soon as possible. Find local SBA assistance in your area with this link

What can I use the PPP for?

At least 75 percent of the loan is to be used to fund payroll and employee benefits costs.  The remaining 25 percent may be spent on mortgage interest payments, rent and lease payments, and utility payments related to your business. Please visit this U.S. Treasury page for the full list of permitted uses of the PPP. 

Is the PPP a loan or a grant?

The PPP is a loan that may be forgiven in full if certain requirements are met.  These requirements include: businesses must keep workers on their payrolls for an eight-week period after the loan is granted, and the business can only use the loan for the costs outlined above.  Business will need to submit a request for forgiveness to the lender that services their loan and must include documentation verifying employees, pay rates, and how the loan money was used.

Remember, do not solely depend on the fact that this loan may be forgiven. The instructions on how to forgive the loan is not fully written and is updating daily. Businesses should always expect to be required to pay back the amount in full with 1% interest within 2 years of the loan.

What are some documents that I may need to submit along with my application?

You may need to provide the following documents:

  1. articles of incorporation,
  2. bylaws or operating agreement,
  3. copies of each owner’s driver’s license, 
  4. payroll expense verification documents (IRS forms 940 and 941, payroll summary report with corresponding bank statements, breakdown of payroll benefits (vacation, allowance for dismissal, group healthcare benefits, retirement benefits, etc.), 1099s if you are an independent contractor),
  5. certification that all employees live within the United States (if any do not, provide a detailed list with corresponding salaries),
  6. trailing twelve-month profit and loss statement (as of the date of application),
  7. most recent mortgage or rent statement,and 
  8. most recent utility bills.

How much money can be borrowed through the PPP, and can I receive funding if I have refused funding from other sources?

The loans can be for an amount up to 2.5 times the employer’s average payroll costs, not to exceed $10 million. Lenders will not consider whether the borrower sought and was refused credit elsewhere, require a personal guarantee for the loan, or require collateral for the loan. 

I am a sole proprietor applying for PPP. Can you walk me through the process?

Each bank will have a different process on how to apply. Generally, you should first contact the banks that you have a business relationship with. You can call your bank or visit their website to apply. If your bank no longer accepting applications or you do not have relationship with any bank, you may need to call around to see which banks will accept new application. Also, please visit here to find banks participating in PPP nearest to your location. You can go down the list, visit their site to see whether they are still accepting application even if you are not a customer. 

If a bank willing to accept your application, you will fill out an application online or over the phone with questions similar to the form above. If you have employees, you are probably using some kind of payroll services and you can use that to find your average monthly payroll. If you do not any employee, look at your Schedule C, line 31 to find your yearly net profit. You can use that number divide by 12 then multiply 2.5 to find the loan amount that you can request. Do not count compensation to independent contractor in your payroll calculations. If you received EIDL, you must let the bank know. Once the application is approved, the bank will schedule a closing with you.

What business qualifies for an Economic Injury Disaster Loan (EIDL)?

Almost all businesses eligible to apply for PPP are eligible for EIDL. Due to limited funding, the SBA is no longer accepting new application and will only accept limited application for agriculture businesses as of May 5, 2020. If you were able to apply before the initial funding ran out, the SBA will continue to process your application. Please check SBA’s site daily as the application process may change.

Are there any other funding options? (express loan, 504 loan, microloan)

Some other options include:
⦁ 7(a) program 
⦁ Express loan program
⦁ Community Advantage loan pilot program
⦁ 504 loan program
⦁ Microloan program
⦁ The Express Bridge Loan Pilot Program
⦁ Please see this page for more information about the types of loans available during Covid-19
⦁ You may also want to seek traditional funding through banks and credit unions. The additional funding approved by Congress on April 23, 2020 also provides $60 billion to small, midsize, and community lenders which offer small loans that your business may be eligible for.

I received a PPP loan. Am I still eligible for the Employee Retention Credit (ERTC)?

No.  An eligible employer may not receive the ERTC if the employer receives PPP.  However, an eligible employer may receive both the tax credits for the qualified leave wages under the Families First Coronavirus Response Act (FFCRA) and the ERTC under the CARES Act, but not for the same wages.  The amount of qualified wages for which on eligible employer may claim the ERTC does not include the amount of qualified sick and family leave wages for which the employer received tax credits under the FFCRA. 

Can I apply for the loan if I am a new business owner?

The business must be in operation prior to February 15, 2020, and that the business had employees to who they paid wages to and payroll taxes for.  Payment will also be considered to independent contractors.

Am I able to receive SBA debt relief and how do I qualify for debt relief on SBA loans?

Yes. You may be able to obtain debt relief on SBA loans. Please see this page for the terms and application process. 

Is there anyone I can contact for more information?

For more information, or assistance with economic aid applications, you should contact your state SBA District Office.  A list of contacts can be found here. You can also contact the West Virginia Small Business Development Center (WVSBDC).
This is general legal information. For guidance about your situation, talk to a lawyer.